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Category Archives: Reversal and Continuation Chart Patterns Tutorial

What are Chart Patterns?

Patterns are the basic foundation of technical analysis. As prices trace their way across the chart, they create patterns that often resolve themselves in a predictable way. The primary tenet of technical analysis is the repetition of human behavior, which can be tracked as well-categorized geometric patterns on the charts. Therefore, recognizing the patterns early results in an opportunity to ... Read More »

What are Double Tops and Double Bottoms?

A double top is a rise in price, followed by a temporary retracement, and then a second rise, which stalls around the same level as the original up leg. This pattern represents a strong resistance level, where an uptrend pauses or reverses. After the completion of the pattern, the price action resembles letter ‘M’. However, if the resistance formed by ... Read More »

The Head and Shoulders Pattern.

What is a head and shoulders top pattern? In the head and shoulders top pattern, an initial rise is followed by temporary decline, creating the left shoulder. Subsequently, the price rises past the initial peak and once more declines, formulating the pattern’s head. The price escalates again, this time rising only as far as the initial peak of the formation ... Read More »

What are Ascending and Descending Triangles?

What is an ascending triangle? The ascending triangles form when the price follows a rising trendline. However, the trend consolidates, failing to make new highs. Ascending triangles are considered to be continuation patterns. Therefore, a break of the resistance prompts a rally. The pattern is negated if the price breaks below the upward sloping trendline. How can we trade ascending ... Read More »

What is a Symmetrical Triangle?

The pattern is identified by two discrete trendlines. The first trendline connects a series of lower peaks, while the second trendline connects a series of higher troughs. Symmetrical triangles generally form during consolidation and the volatility tends to decline as the pattern progresses. Symmetrical triangles tend to be neutral and can signal either a bullish or a bearish situation. Therefore, ... Read More »

What are Rising and Falling Wedges?

What is a rising wedge? Rising wedges form when the market makes higher lows and higher highs within a contracting range. The pattern is considered to be a continuation pattern. A break of an upward line of the formation, allows for the price to ascend. The pattern is negated if the price breaks the lower trendline of the formation. How ... Read More »

Bullish and Bearish Flags.

Bullish Flags In a bullish flag formation, initially the price shoots up forming a ‘flagpole’. Thereafter, the price consolidates by retracing in a narrow range with slight downward or horizontal bias. The high and lows of the retracement are connected to form the flag of the formation. Bullish flags are typically continuation patterns. Therefore, a break of the higher trendline ... Read More »
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